Key takeaways:
- Alpha sources are structurally shifting. Trading alpha faces increased competition amid growing information efficiency and structurally tighter spreads, while technological forces are enabling a wider opportunity set outside of traditional benchmarks for origination alpha.
- Origination alters the return mix, not just returns. By locking in wider spreads or lower valuations, origination can tilt portfolios toward durable income and compounding, potentially improving outcome reliability.
- Portfolios and governance must evolve. The blurring of boundaries between traded and originated assets requires integrated portfolio construction, stronger governance and technology-enabled sourcing to help align investments more precisely with client outcomes.
Why the expanding investment universe changes how alpha is generated
In credit, roughly 2,500 investment-grade issuers and 1,500 high-yield issuers make up the benchmark universe.1 But the total volume of non-governmental borrowing and lending globally is multiples larger. Asset-backed finance, equipment lending, legal credit, trade finance, infrastructure debt, franchise financing, residential mortgages – an estimated $35 trillion addressable market in the US alone, that has historically sat on bank balance sheets or beyond the reach of institutional capital.2 Private credit has been useful in waking up investors to the scale of the investable universe, but it is just one expression of the democratization of finance. Bigger forces are at work.
Tokenization records ownership on distributed ledgers, making assets that were previously difficult to track, value, or transfer suddenly accessible. Loans, leases, receivables, and equity stakes that have never appeared on an institutional investor’s screen can now be structured, recorded, and managed on modern infrastructure
Artificial intelligence makes this expansion practical. Hundreds of thousands of potential investments are unworkable without technology to screen them. AI-driven analysis can assess cash flow profiles, flag risk factors, and prioritize opportunities at a scale no human team can match alone. It does not replace judgment on final investment decisions, but it makes evaluating a dramatically larger opportunity set economically viable.
Together, these technologies are dissolving the old boundaries that separated listed from unlisted, benchmark from non-benchmark, traded from originated. The result is not a niche development. It is a structural expansion of the investable universe that will reshape how alpha is generated across both equity and credit markets for decades to come.
IMPORTANT INFORMATION
Fixed income securities are subject to interest rate, inflation, credit and default risk. As interest rates rise, bond prices usually fall, and vice versa. High-yield bonds, or “junk” bonds, involve a greater risk of default and price volatility and can experience sudden and sharp price swings. Foreign securities are subject to additional risks including currency fluctuations, political and economic uncertainty, increased volatility, lower liquidity and differing financial and information reporting standards, all of which are magnified in emerging markets.
Definitions and footnotes
1Source: Bloomberg, ticker counts for ICE BofA Global Corporate Index and ICE BofA Global High Yield Index, as of 31 March 2026.
2Source: Janus Henderson Investors, McKinsey Analysis, 31 December 2025. There is no guarantee that past trends will continue or forecasts will be realized.
ICE BofA Global Corporate Index tracks the performance of investment grade corporate debt publicly issued in the major domestic and Eurobond markets.
ICE BofA Global High Yield Index tracks the performance of USD, CAD, GBP and EUR denominated below investment grade corporate debt publicly issued in the major domestic or Eurobond markets.
High yield bond: A bond with a lower credit rating than an investment-grade bond, also known as a sub-investment grade bond, or ‘junk’ bond. These bonds usually carry a higher risk of the issuer defaulting on their payments, so they are typically issued with a higher-interest rate (coupon ) to compensate for the additional risk.
Investment grade bond: A bond typically issued by governments or companies perceived to have a relatively low risk of defaulting on their payments, which is reflected in the higher rating given by credit ratings agencies.
Origination alpha: Excess return generated by acquiring or investing in assets at a lower cost than where the broader universe values comparable risk. Origination alpha comes from sourcing new investments that enter a portfolio on better terms than anything available in the secondary market.
Trading alpha: Excess return generated through price appreciation relative to the universe an asset sits in. Trading alpha is generated in secondary markets by identifying mispricings, typically temporary ones, and acting on them before others do.
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These are the views of the author at the time of publication and may differ from the views of other individuals/teams at Janus Henderson Investors. References made to individual securities do not constitute a recommendation to buy, sell or hold any security, investment strategy or market sector, and should not be assumed to be profitable. Janus Henderson Investors, its affiliated advisor, or its employees, may have a position in the securities mentioned.
Past performance does not predict future returns. The value of an investment and the income from it can fall as well as rise and you may not get back the amount originally invested.
The information in this article does not qualify as an investment recommendation.
There is no guarantee that past trends will continue, or forecasts will be realised.
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